The Morrison Coalition government has stepped in with what is potentially the most significant change to the investment mandate for the $10 billion Clean Energy Finance Corporation to date, instructing it to focus on “more reliable 24/7 power” rather than just wind and solar farms.

The new mandate was announced on Friday morning by finance minister Mathias Cormann and energy minister Angus Taylor, who has repeatedly claimed that there is already “too much wind and solar” in the grid, and now clearly wants the CEFC to focus on storage, or “firm” capacity.

“The Government has directed the CEFC to support the development of a market for firming intermittent sources of renewable energy and to prioritise investments that support more reliable, 24/7 power,” the two ministers said in a statement.

“An additional provision requires the CEFC to prioritise its investments with a view to support increased reliability and security of electricity supplies.”

The timing of the announcement appears to have caught the CEFC by surprise, given it took hours to get out a short statement that began “the CEFC has received notice of a new investment mandate” and it refused to take calls – quite unlike the CEFC. It did, however, insist that it was consulted.

But if the government was trying to argue that there was already enough “intermittent wind and solar” on the grid, the CEFC appeared to be insisting that it will continue to make such investments, with grid security in mind.

The Coalition government is believed to be concerned that the amount of “intermittent wind and solar” coming on line in the next three years – 15GW – that will need to be integrated into the system.

This will take the level of variable renewables to around 30 per cent – less than the trigger point for new back-up, according to studies by CSIRO, Finkel and others – but the government wants to accelerate the market for firming “very very quickly.”

The CEFC said the new mandate will “align with work already being undertaken” by the CEFC, noting its investments already made in smart controls, batteries, weather predicting technology and Frequency Control and Ancillary Services (FCAS), all of which support reliability or security of electricity supply.

It provided this table above highlighting some of the investments in storage and other system security measures.

Plus it noted its initial proposed $40 million commitment to Sundrop Farms, the solar thermal system providing energy, heat and desalinated water to a tomato farm in the desert (the funding was later withdrawn because it was privately funded), and the $100 million in financing for the South Australian government’s household battery scheme.

It has also provided funding to Relectrify ($0.75m) to help prove its lithium-ion battery repurposing business, with further development of the technology and initial trials, Redback ($6.4m) to support and accelerate the deployment of its smart hybrid system with the aim of transforming home and commercial solar and battery economics, and finance for 25 small-scale storage projects.

“While the market is still emerging for many of these technologies, our investment pipeline includes technologies such as large-scale pumped hydro, household and grid scale batteries, synchronous condensers and other technologies which can support reliability or security of electricity supply,” CEO Ian Learmonth said in a statement.

“Importantly the new Mandate does not prevent the CEFC from continuing to invest in intermittent renewable energy such as wind and solar, after the CEFC has considered effects on the reliability and security of the grid. We are looking forward to continuing to invest heavily in solar, wind, hydro, bioenergy and other technologies in the renewable energy sector.”

Earlier, the Coalition ministers had insisted in their statement that the CEFC will have to take into consideration the potential effect on reliability and security of supply when evaluating renewable energy generation investment proposals.

“The CEFC has also been directed to continue to focus on emerging and innovative clean energy technologies with a view to further reduce the risk of the CEFC crowding out private finance in more established renewable energy markets,” the statement says.

“These changes ensure that the CEFC will continue to support the Government’s plan for more affordable, reliable energy for Australian families and businesses.”

In the last financial year, the CEFC made $2.3 billion of new investments, including $1.1 billion in renewable energy, $944 million in energy efficiency, $100 million in transport and $127 million in waste-related projects.

Labor also has another $5 billion allocated to a new fund, the Energy Modernisation Fund, which would be focused on ensuring the infrastructure is in place to deal with the transition to a renewables-dominated grid.

Earlier, the Coalition ministers had insisted in their statement that the CEFC will have to take into consideration the potential effect on reliability and security of supply when evaluating renewable energy generation investment proposals.

“The CEFC has also been directed to continue to focus on emerging and innovative clean energy technologies with a view to further reduce the risk of the CEFC crowding out private finance in more established renewable energy markets,” the statement says.

“These changes ensure that the CEFC will continue to support the Government’s plan for more affordable, reliable energy for Australian families and businesses.”

Giles Parkinson is founder and editor of Renew Economy, and is also the founder of One Step Off The Grid and founder/editor of The Driven. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.

Giles Parkinson is founder and editor of Renew Economy, and is also the founder of One Step Off The Grid and founder/editor of The Driven. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.